Where private finance is used, what security do the financiers normally require?
Where project finance is used, the security normally required by the financiers includes: – security over all the assets (including contractual rights) of the project company by way of a floating charge, with fixed security also being taken to the extent permissible under Scots law, and security over the shares in the project company, which involves a nominee of the financiers becoming the registered shareholder; – a direct agreement with the public authority, providing rights for lenders to step into the shoes of the project company in the event of insolvency or other default; – a direct agreement with the subcontractors, providing rights for the lenders to step into the shoes of the project company in the event of insolvency or other default; – guarantees or bonding of the subcontractors’ obligations under the subcontracts (which may be provided to the project company and secured in favour of the lenders) and of the sponsor’s deferred equity/loan stock commitments; and – direct colla
